Telecom Minister also rules out any refund of difference in spectrum cost

Telecom Minister Kapil Sibal, on Wednesday, said the Department of Telecommunications (DoT) needed to quickly decide on the Telectom Regulatory Authority of India’s (TRAI) recommendations on spectrum reserve price for conducting auctions at the earliest as the government needed to generate revenue.

“We are very keen to get revenue to the government and, therefore, naturally, this auction should take place as quickly as possible... Finance Minister needs revenue. I think we need to take decisions on the recommendations quickly so that we can make sure that auction can be successful,” Mr. Sibal told reporters after a meeting with telecom operators here.

The Minister, however, refused to share a timeline for the upcoming auction.

TRAI has recommended a sharp 60 per cent cut in the floor price of spectrum for the upcoming auction after two previous sales drew weak response because of high reserve price.

Rules out refund

Earlier, participating in an open house discussion on the industry here, Mr. Sibal virtually ruled out refunding the difference, if any, between what the operators paid in the last 2G auction in November and the price to be established in the next round of spectrum sale.

Videocon Telecommunication’s CEO Arvind Bali demanded refund of difference in the amount paid by his company during the November auction for 2G spectrum and the final price to be derived in the next round of auction.

“We have bought spectrum at distressed prices. In this auction whatsoever is the price established if there is difference I think that should be considered to be released out,” Mr. Bali said.

Responding to the demand raised by Videocon, Mr. Sibal said: “You participated in an auction, now there is going to be new auction...you know this (the demand that the government pay up the difference) is something that may never be accepted ...nobody forced you to participate in the auction.” Videocon was among those companies whose 21 licences were cancelled by the Supreme Court in February and had to participate in auctions for continuing operations. Asked about the future course of action, Mr. Bali said they were hopeful that the government would look into their demand.

‘Irrational’ penalties

Our Staff Reporter reports:

Mr. Sibal criticized Department of Telecom officials for levying ‘irrational’ penalties on operators, saying if they fail to apply their minds while imposing fines, their powers may be handed over to the sector regulator.

“The issue of penalties is a very serious issue. I have been talking about it for the last two years. I have been trying to persuade officials in my ministry to take a rational viewpoint. For every minor issue, they impose a penalty of Rs.50 crore, which is entirely irrational,” he said.

He was speaking after the holding an open house discussion with industry players, some of whom raised the issue of DoT levying the maximum penalty of Rs. 50 crore for even minor issues.

The minister said this hurt the industry and even the government got no revenue as “those penalties are then stayed by court as they are irrational in most cases.”

He added, “I hope officials in my ministry will apply their mind openly on every infraction and...impose penalty commensurate with the nature of the fault.” The minister warned if the officials continue with current ways and he see no progress he “will have to give that power to TRAI so that it's taken from them.”

The open discussion was attended by Reliance Communications CEO Gurdeep Singh, Idea Cellular Managing Director Himanshu Kapania, Videocon Telecommunications CEO Arvind Bali, Tata Teleservices MD Srinath Narasimhan and Bharti Airtel Chief Executive Officer Gopal Vittal, among others. Mr. Vittal raised the issue of penalties, saying there should be a clear set of criteria to determine major and minor violations and revenue loss. “We have been levied a very large penalty of Rs.650 crore for revenue that we earned eight years ago of barely Rs.8 lakh,” he said.